Junk-Loan defaults worry Wall Street investors

The financial troubles are spreading through the junk loan market, showing how interest rate hikes are hurting indebted businesses and worrying investors that a credit crunch is looming as the economy slows.

Defaults on so-called leveraged loans hit $6 billion in August, the highest monthly total since October 2020, when pandemic shutdowns hampered the US economy, according to Fitch Ratings. The figure represents a fraction of the sprawling loan market, which has doubled over the past decade to around $1.5 trillion. But more defaults are coming, analysts say.


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